What are R&D tax credits?
Introduced by the UK Government in 2000, R&D Tax Credits are designed to encourage innovation by allowing businesses to reclaim some of the money they have spent on developing new – or improving existing – products, services and process.
A lot of people think that “real R&D” is carried out in laboratories by people in white coats but that is not the case. Qualifying costs are comprehensive and approximately 97% of our workshops result in a successful claim. So whether you’re overcoming specific ground conditions, adapting equipment, creating new processes or developing better, safer, or greener methods of construction, you are almost certainly undertaking R&D.
Construction companies are missing out
Every day on projects and in businesses up and down the country, innovative solutions are devised to overcome process, technical, logistical, method-related or safety challenges. Despite this, the construction industry continues to underclaim relative to its share of the economy by almost a factor of five.
Of the businesses that are claiming, many of them aren’t claiming enough. That’s because accountants frequently miss a significant proportion of the overall qualifying cost. Our team is made up of engineers, architects and surveyors who understand construction, which is why we claim 42% more than the construction average.
The Invennt difference
We don’t put the cart before the horse
Unlike other tax credits, the R&D scheme requires significant technical knowledge as well as tax expertise to submit a successful claim. Most claims consultants started out as accountants, so understandably they start with tax expertise and retrofit technical knowledge to their process.
By contrast, we start with detailed practical knowledge of civil engineering and then apply tax expertise to ensure compliance with the rules set out in the tax code. This may seem like a distinction without a difference but it is significant. To use an example, if you wanted to publish a book on civil engineering it’s pretty important to have a publisher on board, but you wouldn’t necessary want them to write the chapter on structural mechanics.
Similarly, if you’re compiling an R&D tax credit claim its essential to understand the intricacies of the tax code but you won’t get very far without people who really understand the technicalities of construction.
The opportunity for construction
Even if innovation accounted for just 1% of UK construction’s turnover – and our work with clients has shown it is typically several times this – then, for an industry worth more than £145 billion per year, there is potentially over £1 billion in R&D Tax Credit claims that could be made by the construction industry every year.
Yet over the last three years R&D Tax Credit claims from the construction industry have averaged just £23 million per year. This represents a missed opportunity for the industry to take advantage of this important incentive funding to reinvest and improve productivity in the sector.
How you benefit
Through our R&D services, our clients benefit by:
- The identification of current R&D activities in their processes, services, and products
- The preparation of HMRC applications for R&D tax claims
- The achievement of sustainable growth in innovative capabilities
While supporting our clients, we help HMRC to:
- Publicise the benefits of the scheme
- Encourage investment in innovation
Whatever the size or type of your business, we believe that you can unlock value by utilising the R&D tax credit scheme. To find out more, call us for a FREE initial consultation about your business or fill in your details below to download a free guide to R&D tax credits for your construction business.